Last week’s United Nations’ Financing for Development Forum in New York was notable for being the first major event to admit in a formal outcome document that at the current pace, the Sustainable Development Goals will not be reached. The Forum - which deals with all aspects of finance and the financial architecture that regulates finance - planned to push reforms that would make finance work for development. Progress was meagre however, as political blockages still need to be overcome.

The outcome document of the 2017 Financing for Development (FfD) Forum paints an alarming picture: “The current global trajectory will not deliver the goal of eradicating poverty in all its forms and dimensions by 2030”. A key reason is the lack of adequate funding for the SDGs. While there is no lack of ‘hot money’ inflating asset prices and speculative bubbles across the globe, there's a failure to transform that money into development finance, not least because governments are failing to reform the financial system. The 2017 FfD Forum pledged to take “immediate action … to implement the Addis Ababa Action Agenda” (the commitments made at the last International Conference on Financing for Development two years ago), but it’s unclear exactly what the substance of that action will be.

Concessional finance: fighting for a slice of the cake

The access to concessional financing is one issue that divided developing countries and prevented the Group of 77 and China from building a more effective common front on more substantial issues. The total amount of aid grants and subsidised loans is obviously limited, even more so as most donors countries fail to meet the internationally agreed target to provide official development assistance (ODA) to the tune of 0.7 per cent of their GDP. Different developing country groupings have started to fight for the crumbs of the cake - while Least Developed Countries (LDCs) stressed they need more of it, a number of countries in special situations (such as the Small Island Developing States) and even Middle Income Countries also stressed their desire to have access to more concessional finance.

This gave the EU, represented by Development Commissioner Neven Mimica, the opportunity proudly to present itself as the world’s largest donor, avoiding the need to address the more difficult EU performance on policy coherence issues. One such issue is certainly that the EU’s new External Investment Plan places a strong and controversial focus on private sector activities and finance. Many participants stressed that ODA won’t be sufficient to finance the SDGs, and resources beyond ODA will also need to be made SDG-compatible.

Private finance: few sticks, lots of carrots

In the absence of a clear and ambitious vision of how the official sector will fill the SDG implementation gap, some governments reverted to hoping for a miracle. The new manna from heaven to save the SDGs is private investment, but making private finance work for development – or at least ensuring that private firms and investors stop doing harm, stop causing environmental damage or violating human and workers’ rights – will be key if the SDGs are to be achieved.

The strategy presented at the FfD forum was not very credible. On the carrot side of things, there was a lot: Multilateral Development Banks were encouraged to use their resources in a catalytic way and use all sorts of so-called “risk-sharing instruments”, including co-investments, blended finance, public-private partnerships, and guarantees. Governments are supposed to develop “bankable projects” and to attract private investment through a “competitive business and investment climate”. The latter would simply be a race to the bottom if all 193 UN Member States try do it at the same time. It was even “reaffirmed” that ODA should subsidise private investment, an incentive to raid scarce aid budgets for the private investors’ benefit in an attempt to bribe them towards good behaviour.

As for the sticks, there wasn't much to hold the private sector to account against the internationally agreed SDG commitments. Even soft approaches, such as the Addis commitment to work on PPP guidelines were not picked up this year. The big corporations and banks - Citibank and BNP Paribas were prominently represented at the FfD Forum - surely enjoyed the prospect of a free lunch at donors’ and taxpayers’ expense.

Debt sustainability: crisis detected, solutions not forthcoming

A fundamental contradiction that the conclusions of the forum consistently ignore is that the hype to boost leverage ratios by mobilising new debt-creating flows from the private sector takes place in an existing environment of critical and unsustainable debt situations in a rapidly increasing number of countries. The negotiators of the FfD forum outcome were of course aware that global debt levels have reached record highs, and that the situation becomes ever more difficult to manage as “changes in the composition of debt … pose additional risks to an already fragile global economy”. Private debt (including corporate debt) once again played a key role, and with the call from some member states to leverage more of it, the problem becomes the solution and the solution is the problem.

The outcome document says little about solutions, however. CSOs attending the Forum protested that the Addis Ababa commitment to “work towards a global consensus on guidelines for debtor and creditor responsibilities” has still not been initiated at the UN. Even more importantly, they pointed out that work towards building a multilateral debt workout mechanism has been discontinued since basic principles on this issue were adopted two years ago. In this light, the main progress was that a new study on regional debt relief initiatives for countries affected by climate change was presented at the Forum - which was picked up with appreciation by members of CARICOM.

Domestic resources and taxation: renewed call for a global tax body

The paragraphs of the FfD forum’s conclusions dealing with domestic public resources devote a lot of space to mapping all the various tiny and fragmented initiatives that were set up following Addis, in order to find a compromise solution to the lack of an intergovernmental body on taxation. The need for a global tax body was stressed by many, including by a large number of CSOs and by Ecuador as representative of the G77 and China - the group that represents the vast majority of UN Member States.

The future of the forum

On a more positive note, the FfD Forum and its conclusions did devote more attention to cross-cutting issues such as financing and safeguarding social protection and gender equity - but effective action remains a work in progress.

This year's FfD forum attracted an increasing number of participants and organisers of side-events. It is slowly establishing itself as an inclusive opportunity to discuss issues related to financing for development and global economic governance, and is a welcome alternative to, for example, the Annual Meetings of the Bretton Woods Institutions. That said, it would be even more useful if it sent actual work assignments to different parts of the UN system including the General Assembly. When it comes to regulation of SDG financing, there is plenty of work left to do, and the opportunity provided by the Annual Financing for Development Forum should not be wasted.